More than 100 members of a defined benefit scheme wound up in 2011 have lost a landmark High Court case against the fund's trustees for breach of duty.
Mr Justice Peter Charleton yesterday ruled the trustees of the defined benefit pension scheme of Element Six in Shannon acted reasonably and in the interests of all the members when they voted in November 2011 to accept a final €37.1 million contribution from the company and wind up the fund.
While the company was not a party in the case, he criticised its approach, and that of two local directors, to the negotiations leading to the decision and agreed with one witness that it was “shocking”.
The directors had warned the trustees that it would place the business in liquidation with the loss of 359 jobs if they used power conferred on them to attempt to force it to make up the fund’s €129 million shortfall.
They also told the trustees the offer was final and there was no more money, a statement the judge said was "not true", as Element Six's Luxembourg parent, which had not authorised this approach, was willing to pay up to €40 million.
Split
The company's proposal split the six trustees three-three, and was only carried after the chairman Danny Coady used his casting vote.
A number of the scheme’s members subsequently sued the trustees claiming breach of duty, and arguing that various conflicts of interest prevented them from issuing a contribution demand on the company obliging it to make good the scheme’s deficit.
They also claimed a liquidation could have reaped up to €42 million for the scheme.
Similarly, they said it would have been open to the liquidator to pursue payments made by Element Six to its parent, including a €19 million dividend, in the year before the retirement plan was wound up, thus increasing the funds available to the scheme.
Interests
However, Justice Charleton declared that the trustees were not overwhelmed or influenced by any conflict of duty or interest. "As a matter of fact, their decision was solely made in the interests of the beneficiaries," he said. "That decision was arrived at on a fair appraisal of the situation as they saw it and after all reasonable enquiries. It was made honestly and in good faith.
“Their actions can only be judged according to the knowledge they had at the time of their decision.”
Justice Charleton concluded that in the entirety of the circumstances, the trustees’ decision not to make a contribution demand and to accept the company’s €37.1 million offer was not one with which any court could argue.
A spokesman for Element Six said the company “was itself not a party in this litigation but it notes the decision by Mr Justice Charleton in relation to the hearing”.
